Cannon Pictures has ended a year-long effort to secure new financing and is now readying a slate of films to release in early 1993.
A new $ 15 million bank facility from a group of lenders led by Amsterdam’s ING Bank gives Cannon the P&A money it needs release five completed films domestically.
The move, said Cannon finance executive Bob Swan, puts the company back in the marketplace with product.
“There’s no question there’s films in the pipeline and we’re in production now,” he said. “But we’d like to get back to a more normal course of business with domestic releases, and then going to foreign markets,”
The new banking arrangement also lets Credit Lyonnais off the hook. For the last year and a half, Swan and New York investment bankers Richter & Co. have been working to pay down $ 34 million to the French bank.
So far, Cannon has repaid $ 10 million and secured another $ 10 million with future receivables. The remainder will be paid down in installments by 1997 under a new agreement.
“This was a company that spent its entire year recapitalizing,” said Runa Alam, a Richter & Co. managing director. “Now, it can focus on doing on its business.”
Indeed, Cannon president Christopher Pearce can finally release five films, including “Midnight Ride” with Michael Dudikoff and “Fifty/Fifty” starring Peter Weller, to the U.S. market. That should help Cannon’s 1993 performance, since last year’s numbers relied almost solely on foreign box office.
For the third quarter of 1992, ended Sept. 26, the company posted a $ 1.2 million net profit (2 cents a share) on $ 8.4 million in sales. By comparison, the action-picture maker turned in a $ 1.3 million net loss (2 cents) on a slim $ 13,000 in revenues for the same quarter in 1991.
Over the past nine months, Cannon has shaved its interest expenses by 40% as it pays down debt and takes advantage of lower borrowing rates.
The company, though, still is saddled with a negative net worth of $ 4.2 million.
Now, Pearce may revitalize talks to merge his company with Melrose Entertainment, which is owned by his mentor, Yoram Globus. Last May, the two announced a merger at Cannes. That deal, however, was derailed when negotiations with CL dragged on. According to a filing with the Securities & Exchange Commission, Cannon’s board is still considering acquiring all of Melrose’s shares.