Just as Carolco Pictures is wrestling with its banker, Credit Lyonnais, for a new credit line, it has posted a narrower net loss for the third quarter.
The struggling indie must have a new credit agreement by this past weekend or it said it would face possible default–meaning bankruptcy. Negotiations for an extension on the credit line are reportedly ongoing.
Carolco continues to limp along, as it struggles to put its financial house in order by chopping away at its debt. In the meantime, the company has reportedly begun discussions with bondholders to replace their debt with newer notes at a lower cost.
The latest snapshot of Carolco reveals a slimmer company that made significant strides in the last quarter to cut overhead and raise much needed cash to placate creditors.
For the period ended Sept. 30, the company posted a narrower net loss of $ 33 .1 million ($ 1.16 a share), compared to $ 43.7 million ($ 1.53) in the same period last year. On an operating basis, the net loss was $ 4.1 million, vs. $ 31.7 million.
But revenues increased 8.7% to $ 180 million over the quarter. The revenues were buoyed by the sale of rights held by Carolco’s TV, plus worldwide receipts from “Universal Soldier.”
For the nine months, Carolco recorded a net loss of $ 51.9 million ($ 1.90 per share) compared to a loss of $ 91 million ($ 3.34) the previous year.
Nine-month revenues were almost $ 400 million against $ 446.5 million last year.
The results include Live Entertainment Inc., of which Carolco owns just under 50%, excluding intercompany transactions.
More important, Carolco appears closer to the next step of overhauling its balance sheet. Currently it is in negotiations with Credit Lyonnais for an extension on its bank debt, which stood at $ 42 million at the end of the quarter and now rests at $ 32 million.
But with that issue nearly resolved, Carolco’s advisers, Jefferson Capital Group Ltd. and Daniels & Associates, are starting to sound out bondholders to swap their notes for new debt.
The company faces a $ 3.4 million interest payment tomorrow on its 13% subordinated notes and 14% senior notes. A large percentage of the 13% notes are held by Carolco’s strategic partners, but it is likely that a 30-day grace period will be used to insure thatreceipts are in from “Chaplin,” which will hit screens this Christmas.
The company also revealed that it recorded approximately $ 61 million in charges, including $ 15 million in abandoned development projects, related to the sale of TV rights to Spelling Entertainment in September. That deal included the U.S. rights to 150 films for free, pay and pay-per-view TV.
But Carolco added some sobering news. At several junctures in its quarterly release, it noted that it was severely cash-strapped. In regard to efforts to sell additional foreign TV rights, it added: “Failure to find alternative sources of financing will result in the Company being unable to continue to operate as a going concern.”
Carolco also stated that it is currently not in compliance with several requirements of its Credit Lyonnais loan. Additionally, it is looking into a $ 1 .125 million dividend paid on its 13% notes that appear to have been made in violation of the bonds.