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HOWARD & GRAZER PROPOSE TRANSACTION TO BOARD OF IMAGINE FILMS; UNIVERSAL AGREES TO DISTRIBUTE HOWARD & GRAZER'S FILMS AFTER NOVEMBER 27

 HOWARD & GRAZER PROPOSE TRANSACTION TO BOARD OF IMAGINE FILMS; UNIVERSAL AGREES TO DISTRIBUTE HOWARD & GRAZER'S FILMS AFTER NOVEMBER 27
 LOS ANGELES May 18 /PRNewswire/ -- Ron Howard and Brian Grazer, co-chief executive officers of Imagine Films Entertainment (NASDAQ: IFEI), announced today that they are prepared to propose a transaction to the board of directors of Imagine that would be valued at $9 per share to the public shareholders of Imagine. Howard and Grazer together own approximately 54 percent of Imagine's outstanding common shares.
 In a letter to Imagine's board of directors, Howard and Grazer said they are prepared to purchase all of Imagine's non-cash assets, excluding film properties in development, for an estimated price of approximately $21 million, consisting of approximately $14 million in cash and the assumption of approximately $7 million in liabilities.
 Howard and Grazer said they have received a financing commitment for the potential transaction of up to $14 million from Universal Pictures. As part of its financing proposal, Universal would also purchase Imagine's development properties at their book value and pay Imagine for certain other rights.
 "Our principal objective is to provide a way for Imagine's public shareholders to receive no less than the approximate market value of their stock at the time we announced our decision to leave Imagine," said Grazer. "We simply want to give Imagine's outside directors and advisors a back-up alternative as they explore, with our full support, all available options to maximize shareholder value."
 Howard and Grazer have entered into an agreement with Universal, a division of MCA, Inc., to distribute their new company's films after November 27, the expiration date of their current employment contracts with Imagine and of Imagine's current distribution agreement with Universal. This new distribution agreement will take effect regardless of whether Grazer and Howard complete a transaction with Imagine.
 "We recognize that quantifying the value of Imagine's assets is difficult today because the performance of upcoming films such as 'Far and Away' can't be known in advance," said Grazer. "We hope the performance of these films will increase Imagine's value above $9 per share, which is intended as a floor -- and not a ceiling -- on what the public shareholders can realize for their shares. In that event, we would withdraw or perhaps modify our proposed alternative. In any case, we intend to support -- both as directors and shareholders -- any other alternative which the disinterested directors reasonably determine would better serve the interests of all Imagine shareholders, including a sale to a third party, an orderly liquidation or remaining public with a new chief executive."
 Howard and Grazer cautioned that their financing commitment from Universal is subject to a number of conditions and there can be no assurance that such financing will be available.
 They also said the transaction they are prepared to propose would be conditioned on approval by Imagine's board (including the separate approval of the disinterested directors), the execution of a definitive agreement containing customary terms and conditions (including a financing condition and the right of Imagine to actively solicit alternative proposals and to terminate the agreement if it receives a more favorable proposal), the purchase of Imagine's development properties and certain other rights by Universal, approval by a majority of Imagine's disinterested shareholders, and the receipt of a fairness opinion from an independent financial advisor.
 Howard and Grazer have been advised that several purported class action suits have been filed in Delaware Chancery Court based on their May 1 announcement that they will leave Imagine and may make an offer for its assets. Howard and Grazer said they believe the suits are without merit.
 -0- 5/18/92
 CONTACT: George Sard or Anna Cordasco of Ogilvy Adams & Rinehart, 212-557-0100, for Ron Howard and Brian Grazer/
 (IFEI) CO: Imagine Films Entertainment ST: California IN: ENT SU:


TQ -- NY008 -- 1130 05/18/92 08:52 EDT
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Publication:PR Newswire
Date:May 18, 1992
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