Mario Kassar’s moviemaking cliffhanger may soon be over.
With Carolco’s payoff of a hefty bond interest payment this past Friday, a multimillion-dollar receivables sale under way, an anticipated $ 50 million boost in its credit line from key lender Credit Lyonnais and the final touches being put on a new business plan, Kassar’s pummeled indie appears to be staging a comeback.
The expected cash may give Kassar a chance to close the books on a rocky period and jump back in the production ring with some new projects for ’93.
While his critics still see any future films as a long shot, sources close to the Carolco brass say the latest developments mean more cash coming in.
Money for moviemaking
Unlike two months ago, when Carolco used the $ 25 million cash raised from the sale of its domestic TV distribution rights to Spelling Entertainment to pay some of its bank debt, new money raised probably will be used to make movies, while new paper probably will be issued to debtholders.
Although Carolco paid about $ 730,000 in overdue interest payments on its $ 49.6 million worth of 10% subordinated notes due 2006, it faces another $ 3.4 million in semiannual interest payments that are due Dec. 1 on its 13% senior subordinated notes and 14% senior notes. These carry a combined total of $ 49.9 million.
Chances are it will use the 30-day grace period and extend the December payment deadline as it did on the note payment made Friday.
Where Carolco got the cash to make that payment is unclear. But sources said the next payment on the combined $ 49.9 million in notes probably will be made with some of the box office revenues from its Christmas release “Chaplin.”
As for the additional cash, it is expected to come from several arenas.
The company soon will announce the second sell-off of receivables. This should generate $ 25 million to $ 30 million.
Three weeks ago, Sun Life Insurance Co. paid Carolco $ 24.3 million cash for $ 28.9 million in receivables or future payments attached to its television units. The company has about $ 100 million in receivables remaining, sources said.
A chunk of the extra cash from the second sale probably will be used to clip some of Carolco’s $ 40 million debt owed to the three Hollywood guilds, who have threatened in the past to file an involuntary bankruptcy if they weren’t paid.
If Carolco can tap some outside capital or squeeze its foreign partners Pioneer, Canal Plus and Rizzoli for even more cash, highly placed sources say the company’s key lender Credit Lyonnais will consider extending the existing $ 50 million credit line to $ 100 million. Right now that credit line is maxed out.
Two potential outside sources of capital have been investments from Hong Kong’s Star TV and Metro-Goldwyn-Mayer, via a spinoff of its UA asset into a separate distribution entity handling Carolco’s future product (Variety, Sept. 7 ).
While discussions with Star TV’s Richard Li, the 25-year-old son of Hong Kong billionaire Li Ka-Shing, continue to limp along, MGM and CL sources said late last week that the UA link is a remote possibility at best.
Carolco sources had hoped the HK broadcaster would plunk down about $ 60 million for a stake in the indie and Southeast Asia distribution rights. Should that cash roll in, the partners would cough up another $ 60 million, or $ 20 million each.
As for speculation that Tony Scotti, owner of All American Television, would step in and take day-to-day control of the operation, Carolco sources said negotiations are stalled–for now. Others say it is dead.
Last on the list of anticipated changes is Carolco’s merger with video distributor Live. Before that can happen, the company’s debt load must be cleared and Live’s pending restructuring must be complete, Carolco sources say. That restructuring isn’t expected before year’s end, Live sources say.