Orion Trying To Offload Pix

Debt-laden Orion pictures, is shopping a $70 million to $90 million five-picture package to major distributors. The cash-starved company is under pressure to meet bank payments due as early as this week.

Orion has about $50 million invested in the package of films, none of which is secured by its banks; rather, they are all being self-financed by the film company. The sale of the package to another distributor would yield Orion desperately needed cash to meet bank payment deadlines over the next six months.

Additionally, offloading the pictures would relieve Orion of its commitment to finance any remaining production costs and, more importantly, the hefty prints and advertising outlays required to release those films. (Company also is trimming overhead by laying off some staffers. See story, page 13.)

One Orion insider said, “We don’t have any money for p&a after ‘The Silence Of The Lambs’ is released.” The Jonathan Demme pyschological thriller is due out Thursday.

Operating under a directive from Orion’s 70% shareholder, John Kluge, to sell off certain assets immediately, the company is hoping to get an aggregate of $70 million to $90 million for the package, which consists of the now-shooting “Robocop 3,” “Bill & Ted’s Excellent Adventure II” and “The Addams Family” plus “The Favor” and an untitled Floyd Mutrux project (formerly titled “There Goes My Baby”), each of which is in postproduction.

A number of studios, including Paramount and Warner Bros., are said to be interested in the package, which may wind up excluding the “Robocop” sequel because the foreign rights are already tied up as part of Orion’s five-year, $175 million international distribution deal with Columbia.

This gives Sony, via Columbia, a vested interest in Orion and its survival; if Orion were to go under, Columbia would lose the $175 million advance as well as a steady source of product for its international distribution operation.

That has fueled speculation that Orion is in preliminary buyout talks with Sony via independent producer Castle Rock Entertainment, of which Columbia owns a one-third stake.

But on Friday, Sony dismissed press reports linking it to Orion, saying it has no plans to buy the company. Sony said it may purchase additional distribution rights to Orion films on a longterm basis. But that transaction would solely involve rights and no equity investment in the company, Sony said.

Orion faces a Feb. 15 deadline on the resetting of the interest rate on $200 million of its current $509.2 million longterm debt load.

One Wall Street analyst contacted late Feb. 7 said because Orion’s interest rate could be subject to change, the banks “could get less than market value on the interest payments – so to get as much value as they can, the banks may be recalling the debt.”

The company’s longterm debt ballooned to $509.2 million as of Nov. 30,1990, from the $351.5 million it owed as of Feb. 8,1990. Orion’s negative cash flow is $174 million, with $4 million remaining on its credit line and $10 million in cash, according to the company’s most recently reported results, including the last nine-month and third-quarter figures.

Orion has been especially hurt by turmoil in the financial markets; banks are no longer willing to fund independents on a film-by-film basis, Orion’s old modus operandi.

At the end of the third quarter, Orion also had $240 million in production commitments.

Orion’s debt rating has been downgraded twice since last summer, by both Standard & Poor’s and Moody’s, to “speculative.”

In the company’s latest nine month results for the period ended Nov. 30, Orion sustained a loss of $14.9 million, or 78&cents; a share.

Orion hired the investment firm Salomon Bros, to explore strategic financial alternatives following release of its six-month results last summer. At that time S&P downgraded Orion’s debt.

Orion’s lead bank is Manufacturers Hanover Trust. Its other eight banks include Chemical Bank, Security Pacific National Bank and Union Bank of California.

Orion officials issued a “no comment” Feb. 7.

Sources inside Orion expressed anger and frustration that they are being kept in the dark about current developments at the company by principals Arthur Krim, Eric Pleskow and Bill Bernstein.

One distribution source who received information on the package, which included budget and script breakdowns, said he understood the price on the deal was “negotiable.”

Orion provided no footage of the three completed productions, which reportedly is being requested by the interested parties. The company currently has 15 projects on the books that are either in the can or in various stages of postproduction.

At presstime, Orion announced that it has added five members to its board. They are: Howard Finkelstein, prez of both Metromedia Communications and Metromedia Hotelnet; Michael S. Kaufman and Silvia K. Merkle, both managing directors of Kluge & Co., a division of Metromedia; Arnold L. Wadler, senior v.p., secretary and general counsel of Metromedia; and Seymour H. Wigod, a Metromedia senior v.p.

Judy Brennan and Paul Noglows contributed to this report.

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