Howard, Grazer to Enter Film Deal With Universal

The filmmaking team of Ron Howard and Brian Grazer will enter a six-year, 18-movie deal with Universal Pictures next fall, it was announced Monday.

Howard and Grazer, whose hits include “Backdraft” and “Parenthood,” also announced that they were “prepared to propose” buying out the outstanding public shares of the company that they co-founded seven years ago, Imagine Films Entertainment Inc.

Howard’s and Grazer’s agreement with Universal would become effective after Nov. 27, when their contracts with Imagine expire. A person involved with the deal said Howard and Grazer will not be bound exclusively to Universal--but that the studio will retain more than just the first right to refuse their projects.

As described by studio Chairman Thomas Pollock, Howard and Grazer are being hired to produce three movies a year through the pair’s privately held company, HG Productions.

Universal will distribute all of those films. Universal also said that “several” of the films to be made during the contract will be directed by Howard--who first gained fame as a child actor in the 1960s. Financial terms of the contract were not disclosed.

Howard and Grazer said in their own prepared statement that Universal has pledged “up to $14 million” to help finance the possible buyout of Imagine’s outstanding stock. Also as a part of that financing proposal, Universal would “purchase Imagine’s development properties at their book value,” according to Harper and Grazer.

Howard and Grazer founded Imagine in 1985, took the company public in 1986 and together own 54% of the stock. According to their statement Monday, they are now are “prepared to propose a transaction” that would compensate holders of the remaining 46% of the stock at $9 per share. They valued the total transaction at $21 million.

Imagine’s stock closed Monday at $9 per share, down 50 cents, in over-the-counter trading. Imagine traded at an all-time high of $19 per share on May 28, 1991. According to company representatives, three shareholder class-action suits have been filed against Imagine since May 1, when Howard and Grazer first announced their intention to leave the company. The company reported net income of $195,000 for the quarter ended March 31.

Michael Meltzer, Imagine’s chief financial officer, said that a special committee of the company’s board will study the proposal made by Howard and Grazer. The committee, Meltzer said, has hired the investment firm of Salomon Bros. to evaluate “strategic options.”

Through Imagine, Howard and Glazer have already produced films distributed by Universal, including “Far and Away,” a romantic adventure starring Tom Cruise that is to open this Friday.

Universal also holds warrants and options that, if converted, would amount to almost 24% of Imagine’s outstanding common stock. And a top Universal executive, Joseph A. Fischer, sits on Imagine’s board. Fischer will not sit on the special committee described by Meltzer.