Classic Media Terminates Harvey Acquisition
On Tuesday, November 1, 2000, The Harvey Entertainment Company announced that the proposed preferred stock investment by Classic Media LLC has been terminated due to the companies' inability to reach a definitive agreement. On August 24, 2000, Harvey announced that it had signed a Letter of Intent with Classic Media for an investment of roughly US$30 million in exchange for a new issue of Harvey Preferred Stock. The initial conversion price to change the Preferred Stock into Common Stock was set at $3 per share, however after completion of its due diligence Classic Media and Harvey reduced the conversion price to $2.85 per share. Upon which, Classic Media increased its escrow deposit to $1 million. In two drafts of a final agreement, Classic Media tried to reduce the amount invested, and the conversion price further. Upon Harvey's rejection of both drafts, Classic Media withdrew its proposal and requested the return of its deposit. In a meeting on Monday, Harvey's board directed management to return the $1 million deposit. Harvey has said they will continue to "seek alternative financing or strategic transactions" and/or seek another "merger partner or other investment transaction."