Sovereign Pictures announced yesterday it intends to have Andy Vajna’s Cinergi manage its library, as expected, supplanting a rival bid from The Movie Group (Daily Variety, Oct. 8).
While both companies were mum on details, sources in Europe and the U.S. noted Cinergi will be paid just under 10% of library revenues generated under the servicing arrangement.
The force driving the negotiations was Credit Lyonnais, backer to the near-bankrupt Sovereign. The indie, which has made such pictures as “Hamlet, “”Reversal of Fortune” and “My Left Foot,” owed the bank about $ 20 million.
CL, which had been squeezing Sovereign and its majority owner Ariane Revcom of France to find the best suitor, reportedly had five working days since Wednesday to conclude the deal. Revcom, the French production/distribution company, owns about 85% of Sovereign and is expected to retain that stake when the deal officially closes.
Only a letter of intent was announced yesterday.
Like CL, which hopes to recover the hefty outstanding loans from sales revenues generated by Cinergi’s servicing of the Sovereign library, Revcom hopes one day to see some of that coin as well. Realistically, Revcom’s investment, put at well over $ 10 million, is a write-off, highly placed sources said.
Under terms of the proposed arrangement, Sovereign principals Ernst Goldschmidt, David Lamping and other key executives will be retained as paid consultants for a few months and then let go. Sovereign’s president Barbara Boyle, who oversaw film production, resigned earlier although no specific date was given.
Cinergi’s foreign sales arm The Summit Group will not only serve as sales agent for the Sovereign library but will provide certain management services as well. But the companies declined further details about the arrangement.
Sovereign fell from grace, one exec familiar with the operations noted, because its “video rights outside the U.S. (were) going to RCA/Columbia and TV rights outside the U.S. (were) in the hands of Buena Vista. Sovereign had to put up P&A for the sub-distributors who had little chance of making money just on theatrical (and) that’s where Sovereign committed suicide.”
Revcom also showed more than a touch of ineptitude by agreeing to pick up Danish production/distribution/exhibition company Nordisk’s 37.5% stake in the struggling indie two years ago, when the writing was already on the wall. Then Revcom prexy Antoine de Clermont Tonnerre has since departed the company.