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German company won't sell stake in Muppets . . . yet

BERLIN — German media company EM.TV said Friday it had canceled a preliminary agreement to sell to a U.S. investor group a minority stake in the Jim Henson Co., creator of Kermit the Frog and the Muppets, but was continuing talks on the sale "under modified conditions."

EM.TV announced in December that it had signed a letter of intent to sell the 49.9 percent stake to a group led by former UPN president Dean Valentine and investment company Europlay Capital Advisors, and it hoped to close the sale last month.

The letter of intent was terminated by mutual agreement, after its creditors postponed a payment date, EM.TV said in a statement.

"The negotiations will be continued under modified conditions, with the involvement of Dean Valentine and Europlay Capital Advisors," it added, without elaborating.

EM.TV said it is also negotiating with other parties interested in buying all or part of the Jim Henson Co. but did not name them.

The German company says the sale will allow it to finish paying back a loan that financed the acquisition of its stake in Junior TV, a joint venture with the now-bankrupt KirchMedia. Creditor banks have now extended the deadline for its repayment until April 30 to give talks more time.

EM.TV bought the Los Angles-based Jim Henson Co. and rights to the Muppets in February 2000 for $680 million in cash and stock. It has declined to comment on the value of the deal with the group led by Valentine.

EM.TV was founded in 1989 and became a star of Germany's tech-heavy Neuer Markt. But dramatic moves such as buying the Jim Henson Co. — and, one month later, half of Formula One motor racing — proved flawed, piling up debt.