Big Investor to Take Control of Cannon Group : Parretti to Put $100 Million Into Ailing Film Firm

Cannon Group’s major European investor, Giancarlo Parretti, will take control of the beleaguered movie studio under an agreement disclosed Monday.

Cannon’s film activities are to be placed in a separate division called Cannon Entertainment under Menahem Golan and Yoram Globus, the company’s longtime top officers. But, under the agreement, Golan and Globus would no longer jointly control the company with the Parretti group although they would remain stockholders and directors.

A reorganization of Cannon, which has suffered from a paucity of hit films in recent years, had been reported in the works since Parretti and his associates began bailing out the loss-ridden Los Angeles company last summer. The agreement announced Monday is subject to approval by Cannon’s shareholders.

Parretti and his entities will appoint a majority of the board and move Cannon Group’s headquarters from Los Angeles to New York. Parretti, a European businessman with a variety of interests, will be president and chief executive, and Parretti associate Florio Fiorini will be chairman. Parretti and his wife control entities that currently own 40% of Cannon’s stock.

In the latest version of the often-changing plans for Cannon, Parretti’s group “committed to inject additional equity” with a value of at least $100 million into Cannon Group in the next 12 months, as well as arranging a $100-million line of credit for film production in that period.

However, the announcement said “the form of the equity infusion has not yet been determined.”

May Diversify

Cannon officials were not available to answer questions about the plan. The firm has delayed reporting its fourth-quarter loss, which it had said recently will be “very substantial.” Cannon also had said its loss for all of 1987 will “substantially exceed” the $60-million loss reported last year.

Monday’s announcement said Parretti and his associates are “actively considering” a diversification of Cannon Group with the addition of travel, real estate “and/or” insurance operations abroad “that are to be acquired or that are already part of existing Parretti interests.” Under the announced agreement, Golan and Globus each would receive a $750,000 annual salary under a contract to run to Jan. 1, 1996, plus a percentage of pretax profits of the film-related activities.

If terminated without cause, the announcement said, the two would be entitled to $1.5 million damages each and a right to purchase the firm’s film-related subsidiaries at “appraised fair market value (but not less than present fair market value).”

Golan, as chairman and head of creative affairs, and Globus, as president and chief executive, would designate a majority of the directors of Cannon Entertainment.

Besides the two, its initial directors would be Parretti, Fiorini, Christopher Pearce, Barry Jenkins, Jan Bruinstroop, Danny Dimbort, Michael Kagan, Hal Radin and Lewis Horwitz.

The film division plans to produce an additional 12 motion pictures through March, 1989, according to the announcement.

Under the proposed restructuring of the parent Cannon Group, Golan and Globus would have two representatives on the board, presently 14 members. Three directors would be designated as independent, with the rest appointed by the Parretti interests.

According to a recent Cannon filing, the Parretti and the Golan-Globus factions each had six board representatives, with two designated independents.