EDCI Edci Holdings (MM)

NEW YORK, Feb. 16 /PRNewswire-FirstCall/ -- EDCI Holdings, Inc. (NASDAQ: EDCI) ("the Company" or "EDCI"), today announced that the potential purchaser of Entertainment Distribution Company, LLC's ("EDC") Entertainment Distribution Company GmbH ("EDC GmbH") subsidiary and certain related assets and entities (the "German EDC Business") has terminated further negotiations. As previously disclosed in EDCI's January 15, 2010 press release, the cooperation of Universal Music Group ("UMG") was critical to any such transaction. However, the potential purchaser has now advised EDCI that UMG conditioned such cooperation on demands for significant contractual modifications that it believes are "unbridgeable." As part of the plan of dissolution approved by EDCI's stockholders, the Company's Board of Directors reserved $10 million of the proceeds available for the initial distribution to effect a tender offer, but deemed it advisable to delay the contemplated tender offer given the discussions related to the German EDC Business. As those discussions have ceased, EDCI intends to resume implementation of the tender offer and expects to provide updates as to the timing thereof in the coming weeks. The tender is designed to 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 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 believes 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. EDCI reminds stockholders that the range of estimated liquidation distributions as set forth in its definitive proxy statement filed with the Securities and Exchange Commission on November 16, 2009 did not include any value for EDCI's investment in EDC as EDCI was, and continues to be, unable to provide any assurance that its efforts to seek value for that investment will result in any additional proceeds. Based on the latest negotiations related to a potential sale of the German EDC Business, EDCI believes that no transaction involving the sale of the German EDC Business is likely in the near future. However, during EDCI's three-year dissolution period required under Delaware law, EDCI will continue its efforts to seek value for its investment in EDC by exploring strategic alternatives and seeking, as appropriate, cash distributions, subject to applicable legal requirements. If EDCI continues to own any interest in EDC at the end of the three year dissolution period, EDCI anticipates transferring such interests to a liquidating trust, for the benefit of its stockholders. About EDCI Holdings, Inc. EDCI Holdings, Inc. (NASDAQ:EDCI) is a multi-national company, headquartered in New York, that is seeking to enhance shareholder value by pursuing acquisition opportunities. EDCI is the holding company of Entertainment Distribution Company, Inc., which is the majority shareholder of Entertainment Distribution Company, LLC ("EDC"), a European provider of supply chain services to the optical disc market. EDC serves every aspect of the manufacturing and distribution process and is one of the largest providers in the industry. EDC's clients include some of the world's best-known music, movies and gaming companies. EDC's operations include manufacturing and distribution facilities in Hannover, Germany. For more information, please visit http://www.edcih.com/ Cautionary Statement About Forward Looking Statements This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning EDCI's proposed Plan of Dissolution. EDCI cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Actual results may differ materially from the results predicted. Such differences may be caused by factors such as, but not limited to, EDCI's ability to sell its assets in a timely manner or at all pursuant to its plan of dissolution; EDCI's ability to settle, make reasonable provision for, or otherwise resolve its liabilities and obligations; a change in economic conditions; the risks associated with EDCI's dependence on UMG's cooperation regarding any transaction involving EDC or the German EDC Business; and our Board of Director's ability to abandon or delay the implementation of the plan of dissolution. More information about these and other important factors that could affect our business and financial results is included in the "Risk Factors" section of our quarterly report on Form 10-Q we filed with the Securities and Exchange Commission ("SEC") on October 30, 2009 and the proxy statement we filed with the SEC on November 16, 2009, as well as EDCI's other filings with the SEC, including its Annual Report on Form 10-K. EDCI undertakes no obligation to publicly update or revise any forward-looking statements. Web site: http://www.edcih.com/ DATASOURCE: EDCI Holdings, Inc. CONTACT: Matt Behrent, +1-646-201-9549 Web Site: http://www.edcih.com/

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