United Artists closes deal with Merrill Lynch

What Wall Street giveth, it also taketh away.

United Artists closed its $500 million deal with Merrill Lynch late Thursday morning in the wake of news that Goldman Sachs had backed away from committing to a $1 billion fund for MGM.

Goldman Sachs was one of five banks considering underwriting the MGM fund. Move was Hollywood’s first brush with the widening credit crunch.

However, MGM CEO Harry Sloan said Goldman Sachs’ move — or any delay in the franchise fund — would not impact the movies it has in the works, including “The Hobbit,” a co-production with New Line, or the next installment with the Bond franchise, which it is cofinancing with Sony.

“No MGM property will wait for a film (finance) slate,” Sloan said.

Of course, MGM’s future possible tentpoles have issues of their own. “The Hobbit” has been locked in a battle between Peter Jackson and New Line, while legal wranglings have been holding up “Terminator 4.”

Sloan said that the Lion was waiting until the UA deal closed before moving forward on the MGM franchise film fund, which he says the company will offer at a later date.

MGM invested substantial coin in the UA deal, which has been in the works for months.

Paula Wagner and Tom Cruise became co-owners of UA last November and almost immediately began raising money for the label with the assistance of CAA. Most of the major negotiations were finalized before the market went south earlier this month.

Wagner said UA was especially pleased to be able to close the deal amid challenging conditions in the financial markets.

“This has been in the works for a long time really,” Wagner said. “It’s yet another vote of confidence in the potential success of United Artists.”

UA’s financing, effective immediately, will provide coin for 15-18 films over the next five years, including two projects in the works: “Lions for Lambs,” a Robert Redford-directed pic starring Redford, Cruise and Meryl Streep that is skedded to bow Nov. 9, and “Valkyrie,” a Bryan Singer-helmed WWII thriller also starring Cruise that is lensing in Germany.

One busy financial dealmaker said the fact the deal didn’t come apart was good news for the entertainment industry and future fundraising efforts.

“There’s no death knell for investment in the entertainment industry,” he said.

Besides MGM, Merrill Lynch also ponied up a sizable chunk of the coin for the UA deal, the bulk of which is a revolving debt facility. Additional monies came from hedge funds and more than 15 institutional investors based in the U.S., Europe, Asia and Africa.

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