Montreal: Malofilm Communications completed the marketing phase Oct. 3 for a new issue of class b subordinate shares expected to raise approximately $12 million net for the Montreal-based integrated distribution and production company.

Stephen Takacsy, vp finance, says between two million and 2.4 million single-vote class b shares have been sold and that the shares qualify for a 100% reduction under the Quebec Stock Savings Plan.

‘If we feel it’s necessary, the stock may become available to institutions in Ontario,’ he says.

Levesque Beaubien Geoffrion and Wood Gundy are the co-leaders and underwriters for the issue. Sprott Securities and Marleau Lemire Securities also sold.

Like other publicly traded Canadian production companies, Malofilm reclassified its shares this past summer, creating multiple-vote class a shares, 10 votes, and single-vote class b shares, ensuring ownership status continues to give the company access to Quebec and Canadian incentive programs

Takacsy says the new funds will be used to acquire additional distribution rights, its core business activity, expand production including multimedia production, and ‘for strategic acquisitions.’ No additional details on what acquisitions might be made have been announced but there is growing industry speculation a major deal is in the works.

Malofilm reported revenues were up 32% to $25.7 million for the nine-month period ending June 30. Earnings were up 48% to $1.7 million. Distribution activity accounts for 88% of the company’s revenues, while ‘over 60% of revenues originate from outside Quebec,’ says Takacsy.

The company’s multimedia division, Megatoon Studios, accounts for about $2 million in annual revenues.

Rene Malo, chairman and ceo, holds about 65% of the company’s voting shares and equity.

Malofilm Distribution has output deals with Paramount Pictures, Turner Home entertainment, Vidmark, the Samuel Goldywn Company, Time-Life Video and Hallmark Home Entertainment.

Malofilm raised $6.75 million in a preliminary offering in December 1993, selling 1.5 million shares at $4.50 a share. Its shares are currently trading in the $5 to $5.25 range.