The Halmis are grappling with a debt crisis, but it’s not a “Category 6: Day of Destruction”-level crisis.
RHI Entertainment is deep into a restructuring of its corporate equity structure, a process that will probably result in it no longer being a public company and might include a stop in bankruptcy court. But Robert Halmi Jr., RHI prexy and CEO, stresses that it’s otherwise business as usual for the telepic and mini-series maker founded by renowned producer Robert Halmi Sr.
The company is working with its 14 lenders to restructure about $600 million in debt that it took on after the Halmis reacquired their production and distribution operation from Hallmark Entertainment in early 2006. The Halmis had no trouble securing the financing for that transaction in the easy-credit days of yore, and RHI raised about $175 million with an initial public offering in June 2008. But shortly after that, the worldwide market for programming from Halmi-style indies began to severely contract, as advertisers slashed spending amid worsening economic conditions.
RHI at present is technically in default to many of its lenders, but the company is working with them on a restructuring plan that will wipe out shareholders’ equity — including Halmi’s 10% stake — and leave the company in the hands of its major debtholders. RHI’s stock was formally delisted from the NASDAQ index on June 1, after the share price fell below $1 for 30 consecutive days, among other equity criteria.
“Clearly, we were over-leveraged,” Halmi says. “But we’re still in business, still making films and business now is pretty good.”
Halmi says the company hopes the restructuring process will be completed by the fall.
If RHI does wind up filing for Chapter 11, it should be a swift process, with all the lenders on board from the get-go, he says.
In the meantime, cash flow from RHI’s library product and license fees have been enough to fund production on 20 to 25 two-hour telepics set for this year (for Syfy, Lifetime, Hallmark Channel, etc.) and five or six miniseries. The mini roster includes a four-hour mini in development at ABC about the life of the Von Trapp family, of “The Sound of Music” fame, penned by “John Adams” scribe Kirk Ellis.
Last summer, RHI also opened an L.A. office with two high-level exec hires and the intent of breaking into the network series business. That expansion plan has been scaled back by necessity, but Elizabeth Stephen remains with the company as exec veep of series, with a focus on fielding eight- to 10-hour “event” series in the vein of “The Tudors.” Tom Patricia, a longform TV vet who joined RHI as an exec veep at the same time, has exited the company, Halmi confirms.