EDCI Holdings, Inc. Announces Initial Dissolution Distribution Payment Amount And Date

NEW YORK, Jan. 15 /PRNewswire-FirstCall/ -- EDCI Holdings, Inc. (Nasdaq: EDCI) ("the Company" or "EDCI"), today announced the following developments.

EDCI Plan of Dissolution.

On January 14, 2010, EDCI's Board of Directors met to determine the timing and method for the initial distribution of proceeds to its shareholders in accordance with the previously approved Plan of Dissolution.  At that meeting, the Board of Directors determined to revise the aggregate proceeds for the initial dissolution distribution and contemplated tender offer slightly higher to a new total of $31 million.  Of this new total, the Company's Board of Directors approved an initial dissolution distribution payment of $21 million, or approximately $3.12 per share of EDCI's common stock.  The Company's Board of Directors has fixed January 20, 2010, as the record date for determining stockholders entitled to participate in the initial dissolution distribution.  The initial dissolution distribution will be paid on February 1, 2010 and the Company's common stock will trade ex-dissolution distribution commencing on February 2, 2010.  

As previously announced, the Company's Board of Directors has been considering using a portion of the proceeds available for the initial distribution to effect a tender offer.  Such an approach would afford additional flexibility to stockholders who prefer a fixed amount of cash and immediate recognition of any tax-losses to so elect, for a portion of their shares.  The Company's Board of Directors determined that such a tender should be initiated in an amount of up to $10 million.  The total of up to $10 million would be reduced pro rata if the result of the tender would put EDCI's net operating losses at risk, as EDCI believe it is prudent to continue to protect those tax-loss carryforwards at this time.  Any amount not successfully tendered would be subsequently distributed as a dissolution distribution payment.  However, the Board of Directors deemed  it advisable to delay  the contemplated tender offer related to EDCI's common stock given that EDCI's majority owned subsidiary Entertainment Distribution Company, LLC ("EDC") is currently in discussions with a potential buyer of its Entertainment Distribution Company GmbH ("EDC GmbH") subsidiary and certain related assets and entities (the "German EDC Business").  The Company is not able to predict with any certainty the outcome of those discussions at this time and notes that the consummation of such transaction is subject to many risks and uncertainties and EDC can provide no assurances that such a transaction will be consummated on the terms currently contemplated or at all.  In particular the cooperation of Universal Music Group ("UMG"), EDC's largest customer, is critical to any transaction, and EDC cannot provide any assurance UMG will so cooperate.  The Company believes a sale of the German EDC Business on the terms currently being discussed would represent the best outcome for all of EDC's constituencies, including its unionized workforce of approximately 700 employees and UMG.  EDCI believes the new owner plans to invest in and grow the German EDC Business by expanding its distribution capabilities.  EDCI does not intend to update stockholders on this matter until a time at which a more certain outcome exists.