Artisan Entertainment aims to close on a $150 million securities deal involving its homevid library by mid-October, then launch its long-discussed initial public offering just after the Halloween-week bow of its “Blair Witch 2.
Chase Securities is also helping the film producer to reshape an existing $175 million corporate credit facility.
Merrill Lynch is managing Artisan’s IPO, first discussed after last year’s stunning success of “The Blair Witch Project” but shelved by early summer when market conditions soured.
An internal power struggle at Artisan also didn’t help, with co-chief exec Mark Curcio ultimately exiting and Amir Malin assuming sole CEO reins. Curcio’s departure was preceded by the earlier ankling of Artisan marketing exec John Hegeman.
Company officials declined comment, but a well-placed source said the company plans to price its IPO the first week in November. The source said Artisan, which filed notice of its intent to go public in April, still plans to sell 6.9 million public shares, or 30% of the company, to raise $100 million to $140 million.
Tough row to hoe
Historically, Hollywood production companies have had a difficult time in the public markets, said analyst Arthur Rockwell of Rockwell Capital Markets in Los Angeles.
“It’s been quite dismal to be frank about it,” Rockwell said. “But when someone has got a company that appears to be a little bit hot, they think they can ride that brief success period into convincing investors it’s always going to be that way.”
By timing the IPO to the release of “Book of Shadows: Blair Witch 2,” Artisan hopes the sequel will live up to the performance of the original horror film and that box-office success will translate into investor enthusiasm. “Blair Witch 2” is set for release Oct. 27 on 3,000 screens.
Chase Securities managing director John Miller declined comment on plans for redoing Artisan’s credit facility or adding a homevideo securities deal. But a well-placed source said a four-year facility would replace a current pact set to expire in about 18 months.
The dollar amount won’t change after the redo, but a portion of the Artisan library will be stricken from collateral terms to allow a “securitization” of a portion of its anticipated homevid revenue. Chase met with bankers involved in the current facility Thursday to discuss all of the plans.
The homevideo deal keys on expectations that domestic homevideo revenue from the packaged film-and-TV titles will produce cash flow in excess of $200 million over the next five years. That would deliver $150 million in proceeds to Artisan plus an adequate return for investors in bonds, or debt securities, fashioned out of the anticipated revenue streams.
Artisan will package U.S. vid rights to several thousand of its 6,000 library titles in the securitization. The library includes about 3,500 wholly owned feature film titles and 500 more TV and shorts titles, with the majority of that catalog produced by Artisan predecessor Live Entertainment. Artisan holds long-term video rights on the rest of its library titles, acquired from companies such as Republic and Hallmark.