Led by activist investor George Armoyan, Halifax-based Clarke Inc. (TSX:CKI) has acquired a majority stake in Vancouver's ailing Art in Motion Income Fund (TSX:AIM.UN).
In a private placement, Clarke acquired GVP Holdings Inc.'s interest in the fund, which is jointly owned by Garry and Vicki Peters, Art in Motion's founders.
Clarke acquired 627,000 AIM units, 535,388 class B limited partnership units of Art in Motion LP and 2.1 million class C limited partnership units of AIM LP, representing 25% of the outstanding units of AIM LP.
Clarke now owns more than 3.7 million units of the fund, which represents roughly 47% of the units outstanding and approximately 60.1% of the fund's voting rights. Clarke paid roughly $1.3 million for AIM's trust units and an undisclosed amount for AIM's LP units.
As part of the sale, Garry and Vicki Peters will continue to be involved with the business as advisers for a minimum of one year.
Art in Motion has had a difficult year. Its revenue fell to $31.5 million for the nine-month period ending September 30, 2007, compared with $40.4 million in the same period in 2006.
The fund has suffered through a difficult market for authorized art reproductions, which has been compounded by a soaring Canadian dollar and the proliferation of cheap fakes from Asia.
But Art in Motion's net income rose to $2.2 million compared with a net loss of $25.2 million in the nine-month period ending September 30, 2006. That dramatic income turnaround was due in large part to a $3.3 million sale of the fund's land and building on Brigantine Drive in Coquitlam and a write-down of goodwill reported for fiscal 2006.
Art in Motion's unit price range during the past week: between $1.02 and $1.08; 52-week high: $3.15; 52-week low: $0.98.