Fund blends bank loan money, private investor capital
In a sizable boost to its production coffers, Warner Bros. Pictures has inked a unique $528 million co-financing deal with Relativity Media that will help pay for a preselected slate of six films to be released within the next 16 months.
Exact titles are being kept under wraps for now.
Structured by Relativity, fund is a blend of bank loan money and equity capital raised from private investors, who will get a slice of any profit.
Relativity said none of the parties involved wanted their identities revealed.
Each of the six films will be at least 50% co-financed — some more than that — through the vehicle set up by Beverly Hills-based Relativity, a financing, consulting and production company.
Relativity approached Warners with the idea and the slate of films it wanted to invest in.
“We negotiated and came to an agreement that made us all happy,” Relativity CEO Ryan Kavanaugh told Daily Variety.
Studio gets diversity
“The benefit for the studio is that they get a significant amount of money that gives them a greater production spend and more diversity. Without detailing too much, the equity investors are buying a piece of the film slate and profits, while the bank gets interest,” said Kavanaugh, who runs the company with partner Lynwood Spinks.
Generally, a studio goes to a bank with a specific project to underwrite, rather than a preselected slate.
Unlike Warner’s recent $500 million co-financing deal with financier Thomas Tull’s Legendary Pictures, Relativity won’t be a producing partner.
To date, Relativity Media has structured and secured more than $2 billion in production financing for studios and independent production companies.
Earlier in the summer, Kavanaugh and Spinks structured a deal that provided Marvel Entertainment with a $525 million revolving line of credit from Merrill Lynch Commercial Finance Corp. The collateral was the movie rights to some of Marvel’s superhero characters, should Marvel default on the loan.
Duo has raised capital for a number of other filmmakers and distribs, including Mark Canton’s Atmosphere Entertainment and France’s Exception Wild Bunch.
Other financing activity
Relativity also financed and was a producing partner on Universal’s “Land of the Dead.” Ditto for New Line’s upcoming “Nothing But the Truth.”
Kavanaugh said the co-financing pact with Warners was inked in short order.
“The deal closed less than 60 days after the signing of the initial term sheet — testimony of both the quality of Warner’s product and the wherewithal of the capital provider involved here,” Kavanaugh said.