Cinar Sued By HighReach
The former owners of Cinars subsidiary, HighReach Learning, Inc., have filed a lawsuit against the parent company to recover alleged losses related to a stock purchase agreement concluded with Cinar as part of the purchase price of HighReach in 1998. The complaint contains allegations that Cinar is liable for losses in stock due to the ongoing investigation into their alleged fraudulent actions. "These legal proceedings pertain to circumstances surrounding the stock purchase agreement negotiated between Cinar and the former owners of HighReach Learning in 1998. This does not affect HighReach's day to day operations, nor does it affect our numerous projects in support of Cinar's ongoing business," said Michael G. Mayberry, president of HighReach Learning. The producers of such kids toons as ARTHUR and RICHARD SCARY also released a status report on their internal investigation into the companys financial problems stemming from non-board approved investments and alleged charges of tax fraud. The TV producers auditors, Ernst & Young LLP, have "expressed concerns" about the company's ability to meet its publicly stated deadline of June 30, 2000 for the preparation and filing of financial results. Cinar professes that it will work diligently to file its newly revised financial reports as soon as it can. The companys stock has not been traded since Thursday, March 9, 2000. At last trade the stock was priced at US$5 7/16, down from a 52-week high of $30 1/4 in mid September 1999. The troubles for the toon house started when a government investigation into tax fraud was called to look into the use of false Canadian names on scripts written by U.S. scribes.