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An Ontario Superior Court judge has rejected an injunction Dancap Productions sought to block the sale of two downtown theatres, paving the way for their sale to rival Mirvish Productions.
Mr. Justice Geoffrey Morawetz issued his much-awaited decision yesterday following a hearing in June in which Dancap argued the Canon and Panasonic theatres on Yonge St. should not be sold by U.S.-based Key Brand Entertainment to Mirvish Productions.
"The important thing is that this (ruling) establishes Key Brand's right to sell us the theatres and it establishes our right to buy," said theatre impresario David Mirvish.
"I have no reason to not close the sale. This is a pretty strong judgment. I'm kind of pleased because I prefer to spend my time in theatres rather than in court," Mirvish said.
"I didn't have a great deal of discomfort in this. I just felt that a very rich person was trying to waste a lot of money, a lot of other people's, including his," Mirvish said, referring to Dancap president Aubrey Dan.
The civil case pitted Mirvish, the theatre powerhouse behind Toronto productions of We Will Rock You and Dirty Dancing, and Key Brand against relative newcomer Dan, whose company is presenting Avenue Q to the city and whose production Jersey Boys starts tomorrow.
In January, Key Brand acquired the Canadian assets of Live Nation Inc., including the Canon and the Panasonic. It then finalized a deal to sell the theatres to Mirvish Productions in April for $35 million.
Dancap Productions argued before Morawetz that its purchase of a 12.5 per cent stake in Key Brand in 2007 entitled it to a role in the management of both theatres, which would allow it to stage its own Broadway-style productions there.
Dancap also argued allowing Key Brand to sell the theatres to Mirvish Productions, which already owns the Royal Alexandra and Princess of Wales theatres on King St. W., would freeze Dancap out of the downtown area where audiences traditionally attend Broadway-style theatre, creating "irreparable harm," a claim Morawetz rejected.
Mirvish Productions, in turn, argued it had a joint management deal with Live Nation and its predecessor, SFX Theatrical Group, to manage both theatres, not set to expire until 2016. The agreement also gave Mirvish Productions the first right of purchase for the Canon.
Morawetz noted in his judgment that Dancap was aware of Mirvish's management deal with the two theatres and proceeded to buy shares in Key Brand regardless, without requiring language to be inserted in the purchase agreement that would have terminated or altered the Mirvish management agreement.
"The granting of the injunction would have the effect of granting Dancap rights for which it did not negotiate," Morawetz's ruling said.
Morawetz also noted that Key Brand, in purchasing the assets of Live Nation, was required by its financier, JP Morgan, to sell or enter into a leaseback agreement for the two theatres to reduce its debt load, a condition Dancap was aware of.
Neither Dan nor a spokesperson for his company returned calls from the Star yesterday.
