Cinergi to Pay Disney Debt By Turning Over Its Library

Cinergi Pictures Entertainment, the troubled independent film company hammered by losses from such films as “The Scarlet Letter,” “Judge Dredd” and “Nixon,” will pass virtually all of its library over to Walt Disney Co. in lieu of paying Disney $38.4 million advanced to Cinergi to make movies, it was disclosed Thursday.

The pending move marks what most analysts believe is the beginning of the end for Cinergi, which acknowledged that it is considering liquidating other assets. The deal comes after investment advisors unsuccessfully shopped the firm to other prospective buyers.

Cinergi also put the brakes on any movie projects and said its 25-picture distribution deal--of which nine films have been delivered--will end when the sale is complete.

In the 1995 fiscal year, Cinergi lost $16.1 million. Although the company hasn’t filed its results for the 1996 fiscal year, it said in a recent Securities and Exchange Commission filing that it expects a loss for 1996, albeit a smaller one than in 1995.

Cinergi marks yet another case in which investors have lost their shirts investing in small, publicly held Hollywood producers. Cinergi’s stock, now hovering at barely more than $1, was offered to the public at $14.50 a share in 1992.

It’s not clear how much money stockholders would get once all the remaining assets, which include film projects and a special-effects group, are sold.

Disney was an investor in Cinergi and advanced money to the company that was paid back through television and video revenues. Other Cinergi films Disney released included the musical “Evita” and “Tombstone.”

The library sale to Disney does not include “Die Hard with a Vengeance,” which co-owner Twentieth Century Fox is expected to acquire. Also not included are rights to the film “Broadway Brawler,” a Bruce Willis film that abruptly ceased production recently.

Cinergi is headed by producer Andrew Vajna, the subject of a federal grand jury investigation involving his personal tax returns.

The company has said that it has not been identified by the U.S. attorney as a target of the probe.