Montreal: Cinar Corp. says a resolution to its tax-credit review, underway for close to a year, is imminent.

The resolution will include paying taxes owing and penalties, says Cinar president and ceo Barrie Usher in an Oct. 4 letter to shareholders. Once the tax-credit issue is worked out, Usher says, ‘We expect the company will again be in a position to become eligible for all available federal and provincial government incentives.’

Parties to the tax-credit review include Heenan Blaikie, Cinar’s legal counsel; Goodman Phillips & Vineberg, counsel to the company audit committee; Ernst & Young, auditors; and Cinar management.

Cinar management has to resolve two other major issues.

The company has to collect the outstanding balance, us$62 million, of the us$122 million in unauthorized investments, as well as sort through related-party transactions, namely, ‘hundreds of instances of transactions involving company funds which were processed through accounts maintained on [Cinar] books for the three former senior officers…or companies controlled by them,’ says Usher.

He says Cinar is talking to Norshield International of the Bahamas regarding the repayment of of the balance of the unauthorized investments. As for the related-party translations – money received or spent by former senior officers Micheline Charest, Ron Weinberg and Hasanain Panju – Usher says, ‘We expect shortly to ascertain what amounts [Cinar] is owed by these former officers.’

Cinar shares have been delisted by NASDAQ and suspended on the TSE. The company has hired Merrill Lynch & Co. to review all strategic alternatives, including partnerships, mergers and sale.

2000 slate

In production news, Cinar says its fiscal 2000 slate is its second highest ever, with total commitments of more than $160 million, compared to $185 million in ’99 and $125 million in ’98. This year, Cinar has delivered 116.5 half-hours, bringing its half-hour library total as of May 1 to 1,965.

In other news, Cinar and Sony Wonder Canada have announced a five-year renewal of exclusive home video and audio rights to six children’s series: Caillou, Wimzie’s House. The Busy World of Richard Scarry, The Adventures of Paddington Bear, Madeline and A Bunch of Munsch.

Cinar says as a result of the renewal, production was recently completed on two Caillou albums, including Caillou’s Favorite Songs in English and Caillou et ses amis in French. The Oct. 5 in-store release also included two new Caillou videos.

Caillou, an animated preschool series based on the book series from Editions Chouette, has been a top seller for Sony Wonder in the home video market. The series is seen on English and French Teletoon in Canada and debuted on the PBS Kids Ready to Learn service in the u.s. last month.

Sony Wonder is the family entertainment division of Sony Music Entertainment (Canada). *

-www.sonywonder.com

-www.cinar.com