The proposition that Wall Street and hedge fund financial know-how can save the faltering movie business is at the very least being challenged by the faltering fortunes of IMAX, which is controlled by its two largest shareholders, co-chief executives Rich Gelfond and Brad Wechsler. The two are former Drexel Burnham Lambert investment bankers who purchased Imax from its Canadian founders $85-million a dozen years ago. At the times they were partnered with a team of Wall Street investors, including Wasserstein Perella.

Now IMAX is facing an informal SEC inquiry, has been unable to file its financials as it reviews is revenue recognition practices and some observers are predicting that it is about to default on its debt covenants. Oh, and those big shot Wall Street investors have been fleeing the company. Wasserstein Perella long since got out of the business. Even Team Rich & Brad have sold down, reducing their stake to 7 and some odd percent from an initial position of 11%.

Team Brad & Rich are still talking a good game about IMAX but its starting to sound a bit, well, like the dialogue from the 300. How long until they have to say, "Tonight we dine in Hell?"

'Red Flags' at Imax [Edmonton Journal]