Update:

Like Kollyinsider already predicted from the Kaththi Banner, The Tamil Nadu release of Kaththi has been officially reiterated and confirmed for the 22nd of October.
This is indeed a great news for the countless fans of Vijay and all cinema lovers, who have been an anxious lot over the past day or so due to the political controversies surrounding the movie.

This is what the official press statement reads like

We are happy to announce that all the issues have been solved amicably. Kaththi is releasing globally as a DEEPAVALI Dhamaka.

RESERVATIONS WILL START IN THEATERS TOMORROW MORNING ONWARDS.

The director has confirmed the news on his twitter page,

If ‘Kaththi’ does not release, ‘Poojai’ will have to be moved to main screens
The news of a last-minute agreement on the release of Vijay’s much-awaited Kaththi has brought relief to theatre owners, who were watching the negotiations with anxiety. The pull-out of the movie from the Deepavali race would have dealt a blow to their prospects as it is expected to be released in a huge number of screens.

Theatre owners are hoping to schedule Kaththi for release in their main screens. “If Kaththi does not release, Vishal’s Poojai will have to be moved to main screens. It will be difficult for the multiplexes because other films cannot compensate for Kaththi’s business. We will have to increase screens for Shah Rukh Khan’s Happy New Year, releasing this Friday,” said Rakesh Gowthaman, MD, Vettri Theatres.

K. Karunamoorthy of Ayngaran International, the producer of the movie, had earlier said that Kaththi was likely to release in over 500 screens abroad, a first for a movie of actor Vijay.

The developments also affected actor Vishal, who had to intervene to ensure theatres opened advance-booking for his film. “Since Kaththi has been given the big screen in many theatres, they stopped advance booking of tickets because they were not sure of its release. I had to step in and ask the theatres to open the advance booking,” he said.

Earlier:

Producers claim breakthrough in negotiations; Tamil outfits remain defiant

The uncertainty over the release of Vijay-starrer Kaththi on Deepavali day continues even as the producer, Ayngaran International, claimed to have met the demands of various Tamil outfits.

The latter had threatened to agitate against the film and called for its boycott.

Around 11 p.m. on Monday night, representatives of Ayngaran International announced that all issues regarding the film had been amicably settled and the film will release without any mention of Lyca Productions, alleged to have business links with Sri Lankan President Mahinda Rajapaksa.

However, when asked to confirm the news, T. Velmurugan, leader of the Tamizhar Vazhvurimai Katchi, who had brought together several Tamil outfits against the release of the film, said that no communication had reached him about removing the Lyca banner from the movie’s titles.

“We were waiting till late in the night. No one has communicated anything to us. If the movie releases with Lyca in its banner, we will besiege the theatres. There is no question of any compromise,” said Mr. Velmurugan.

However, the representative of Ayngaran International said that all concerned parties had been duly intimated.

The Tamil groups had earlier demanded that all references to Lyca Productions be removed from the title and other publicity material.

They had said that it was unacceptable that a business house connected to Mr. Rajapaksa be allowed to produce a Tamil movie in the State when the Tamil Nadu Assembly, citing human rights violations during the civil war in the island nation, had already passed a resolution seeking severance of business ties with Sri Lanka.

The president of the Chennai Theatre Owners’ Association, Abhirami Ramanathan, had categorically said that they were unwilling to go ahead with the release if the Tamil outfits and the Ayngaran International couldn't reach a compromise.

Sources in the know had earlier said that while the producer had agreed to remove references to Lyca from the posters and publicity material, the negotiations had reached a deadlock about removing it from the title.