"

/www.theanimatedfilms.com"">/www.theanimatedfilms.com/images/TAF.gif"" alignt=""left"">

DW Investment II Inc., an investment firm controlled by Microsoft co-founder Paul Allen, said Wednesday it exercised a right to force DreamWorks Animation SKG Inc. to issue an undisclosed amount of shares.

It is unclear how many shares DreamWorks will be required to issue, but DW Investment said the issuance must create a ""satisfaction event,"" a term defined in a complicated agreement among Allen and the DreamWorks founders -- director Stephen Spielberg, billionaire David Geffen and Jeffrey Katzenberg.

Wall Street analyst Richard Greenfield, of Pali Capital, said in an August note that a secondary offering must generate $307 million in net proceeds for HoldCo, a firm formally known as DWA Escrow LLLP and controlled by Geffen and Katzenberg.

Allen invested $700 million in DreamWorks before it went public, making him the largest private investor.

On Wednesday, Greenfield said the statement indicates Allen has exercised his right. Once the shares are sold, HoldCo, which only exists as a firm in which to park the shares, will be dissolved.

""We estimate the move will generate a stock sale of between 13 million and 14 million shares at current prices,"" Greenfield said.

DreamWorks had 103.6 million shares outstanding at the end of June, which included about 50 million held by HoldCo, according to a DreamWorks spokesman. The shares not sold to the public will allocated to the HoldCo principals.

Bank of America analyst Michael Savner said he expects the size of the offering to be about $300 million, which would be 12.5 million shares based on a share price of $24.

""Importantly, a secondary offering is in no way dilutive to current shareholders,"" Savner said in a note to investors Wednesday.

But 13 million shares represents about 36 days worth of trading volume at the stock's 100-day daily average of 380,000 shares, Greenfield said, which could leave supply well in excess of demand.

DreamWorks confirmed it received Allen's request and said it will determine the appropriate time for the offering.

DW Investment said it expects the move to happen ""as soon as is practicable after the Nov. 3 theatrical release"" of the company's animated movie ""Flushed Away."" DreamWorks has 180 days from the time Allen exercises his option to place the shares.

""We believe that the resolution of HoldCo will be a positive for the company and its shareholders,"" DreamWorks President Lew Coleman said in a prepared statement.

A spokesman for DW Investment would not comment beyond the company's press release.

DreamWorks shares fell 42 cents to $23.76 in recent trading on the New York Stock Exchange. The stock has traded between $20.05 and $28.80 in the past year.

Source: AP"