Writedown on 'Kid,' and 'Board' imperils credit
NEW YORK – Film indie Trimark Holdings’ net loss jumped 82% to $4.5 million in the second quarter ended Dec. 31, it said Friday.
The downturn resulted from a $4.2 million writedown on “Star Kid” and “Chairman of the Board” that also put the company in breach of its credit line covenants.
Trimark said it was “in discussions” with its lead lender, Chase Manhattan Bank, to get its credit covenants amended to waive the breach. Trimark has a $75 million revolving credit line with Chase, of which $56 million had been used as of Sept. 30. Chase execs were unavailable for comment.
News of the loss and credit line breach sent Trimark stock down 75¢ to $4.25. The stock has been trading on takeover speculation for several months, following Trimark’s confirmation that it had hired investment bank Bannon & Co. to advise on its strategic alternatives.
Trimark said it took the non-cash writedown to cover “less-than-anticipated theatrical performance of ‘Star Kid’ and the company’s strategic determination to distribute ‘Chairman of the Board’ as a selected-market theatrical release.”
“Star Kid,” a $12 million-plus project, was made about two years ago under the name “Warrior of Waverley Street,” but sat on the shelf while Trimark waited for the right time to release it, said Trimark’s director of business development Doug Lowell. It opened in mid-January and did about $5 million at the box office.
“Chairman of the Board,” in contrast, won’t open until March. But the decision to release it only in a few markets prompted Trimark to scale back its expectations of how much revenue the pic will do, Lowell said.
In contrast, Trimark expects to make money on “Eve’s Bayou,” which opened during the quarter and which has grossed more than $13 million domestically so far. But film accounting rules require write-offs as soon as a producer knows a pic will lose money, whereas profits are reported as they are earned – which can take years.
Trimark said its revenues rose 40% to $22.9 million in the quarter. Its operating loss rose from $2.5 million to $3.04 million while its interest expense trebled to $1.1 million.