VRL has limited access to film co.'s coin until 2006
SYDNEY — Where is the “Matrix'” moolah? Village Roadshow Ltd. shareholders might be entitled to ask that question after the company disclosed its L.A. production arm made modest profits in the year ending June 30 — and forecast a similar result in the current year.
In a document sent to shareholders, VRL acknowledges it will have a limited ability to extract cash from Village Roadshow Films until February 2006.
That’s when Village Roadshow is due to repay VRF’s $900 million credit facility which bankrolls the movies, including the “Matrix” franchise, it coproduces with Warner Bros. Until then, its primary revenue source is production and overhead fees.
Village Roadshow Prods’ posted $A11 million ($7.1 million) in pre-tax operating profit for the year to June 30, down from the prior year’s $15.4 million, mainly due to intercompany interest charges.
In a document to shareholders which explains why VRL is seeking to buy back its preference shares, the company discloses VRP is budgeted to clock a pre-tax profit of $6.8 million in the current year, despite the success of “The Matrix Reloaded” (which has grossed $735 million worldwide) and the upcoming “Matrix Revolutions.”
“This is a volatile business and we’re being responsible and conservative,” VRL managing director Graham Burke told Variety. “It takes time for revenues to come through the system so we are not booking profits for a time.”
VRL execs have consistently pointed out all 40 films being produced by the WB-Village Roadshow venture are cross-collateralized.
Revenues from “Matrix Reloaded” no doubt have to be set against the less than stellar performances of other titles including “Pluto Nash,” “Analyze That,” “Eight Legged Freaks” and “Dreamcatcher.”
“We’re waiting to see how the full program of 40 films performs,” Burke said.
The document reveals that while WB takes domestic rights and VRF has foreign on all co-prods, their arrangement means in most cases the two parties have 50:50 interests in each film. It refers to a “crossing payments” scheme which redistributes any disproportionate profits between domestic and foreign.
It notes 85% of the international P&A costs are covered by the loan facility, with the remaining 15% funded by VRP out of the proceeds.
VRL shareholders are due to vote Nov. 3 on the preference share buyback proposal after the company’s annual general meeting in Brisbane, Queensland.