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New Line gets $ 125 mil credit line

Independent producer/distributor New Line Cinema yesterday announced financing plans that include a new $ 125 million revolving credit facility and the sale of 2 million shares of common stock.

The company said it had received a commitment from Chemical Bank to act as agent for the new, three-year credit facility, which will replace an existing $ 75 million credit facility established with a Chemical-led syndicate of banks in 1990. The existing facility was set to expire in June.

New Line said it plans to use the new facility to fund production and acquisition of its film projects and for general corporate purposes.

“New Line’s long-term relationship with Chemical Bank has been an important component in funding our growth,” said president and chief operating officer Michael Lynne in a statement. “This new commitment will enable us to expand our production, distribution and strategic efforts.”

Less clear-cut is the company’s decision to offer about 2 million shares of common stock. At yesterday’s closing price of $ 13.63 a share, proceeds from the offering would total about $ 27 million.

Salomon Bros. analyst Margo Vignola called the timing of the offering “awkward” given the stock’s recent anemic price performance (the price of New Line shares dropped about 19% in 1992).

The offering will increase New Line’s total shares outstanding to 16 million and will be dilutive on an earnings-per-share basis.

Because of Securities & Exchange Commission rules, New Line exex could not comment on the proposed stock offering.

But sources close to the company said New Line may be trying to time the offering to coincide with its upcoming release of two highly anticipated films, “National Lampoon’s Loaded Weapon I” on Feb. 5 and “Teenage Mutant Ninja Turtles III” on March 19.

Others point out that New Line has periodically sold stock to increase its equity base as part of its ongoing financing program. New Line’s last stock offering was in March 1991, when it sold approximately 1.6 million common shares at $ 11 per share.

New Line said it will use the proceeds from the proposed stock offering to reduce existing debt, which currently stands at $ 50 million. Underwriters have not yet been named. New Line’s last stock offering was underwritten by Furman Selz and Kidder, Peabody.

The new credit commitment on the part of Chemical is subject to certain conditions, including the syndication of a portion of the facility among a consortium of major banks.

In addition to lead agent Chemical, the last syndicate included Bank of America, Imperial Bank, National Westminster Bank PLC, the Bank of California, Societe Generale and Yasuda Bank.

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