Seven Arts Entertainment Inc (OTCMKTS:SAPX) has confirmed a Letter of Intent to sell membership interests in Seven Arts Filmed Entertainment to The Movie Studio Inc. Seven Arts is a company that concentrates on motion pictures and wireless communications. SAPX will be giving up 60% of its share in the entertainment company and distribution rights to thirteen motion pictures in return for settlement of $2 million in debts of the movie library assets. TMS will have access to distribution rights to the motion pictures for a total of 60-days. During which TMS can use them in the Cannes film Festival.

The company CEO, Rick Bjorklund, stated that this had been done to improve the company’s balance sheet and increase the shareholder value. It is also expected that the CEO would also push the board towards offering a one-time dividend to shareholders, on completion of the deal. The dividend, however, will be offered in the form of TMS preferred stock, the remainder of which would be used to fund future projects.

The acquisition has been valued at $750,000, which will be paid through the preferred stock on the basis of a 3-day volume average of TMS stock. It was announced by TMS that after the acquisition, SAFELA would operate as an independent subsidiary of TMS. It will control approximately $2 million in the form of company’s convertible notes. The acquisition is part of TMS’s strategy of expanding through the process of acquisitions and integration of new movies to its distribution lists.

SAPX has been experiencing a downward trend for the past few years. What the company does with the newly acquired resources to turn this downward trend is still to be seen. If the CEO is able to convince the board for a one time dividend, then he will surely be able to catch their interests and produce an upwards trend for the stock.

Seven Arts Entertainment Inc (OTCMKTS:SAPX) closed at $0.00090 on May 15. The company has 162.78 million shares being traded in the market, with a 52-week range of $0.00-$0.00. SAPX has a market cap of $146,510.