DreamWorks delays its loan pitch
LOS ANGELES (Hollywood Reporter) - Representatives of the new DreamWorks film studio will delay pitching Wall Street on a bank loan package for about one month to give the banking market time to stabilize.
The good news is that DreamWorks principals Steven Spielberg and Stacey Snider are confident that their new partners at India's Reliance Big Entertainment (RBE) can provide all the capital necessary to get the new company up and running until the bank financing is secured. RBE has agreed to provide DreamWorks at least $550 million in exchange for a 50% equity stake in the production company, recently separated from Paramount with several development projects in tow.
DreamWorks' lead banker JPMorgan also will put up about $125 million and aims to secure similar pledges from one or more other lenders in January -- or about a month later than initially envisioned. A small loan syndication also is planned with the hope that the various lending commitments will total $650 million or more.
That's about $100 million less than originally targeted before the turmoil on Wall Street. The modestly lower loan package and the delay in pitching additional lenders is a simple acknowledgment that the recent market woes will have bankers preoccupied for the next few weeks.
It's also believed that the longer timeline will allow for a more orderly and thorough financing process.
An additional loan of $150 million likely will also be provided by whoever wins the race to secure distribution rights on DreamWorks films. But that money would be tapped only if all other funds were exhausted, under plans presented to prospective distribution partners.
Universal remains in the lead for the DreamWorks distribution rights, with an announcement expected within the next week or so. But DreamWorks execs also are seriously mulling Disney as a possible alternate candidate, believing Disney's roster of films might offer less thematic overlap with DreamWorks' intended slate and thus pose less potential for conflict over key release dates.
DreamWorks aims to produce about six films per year starting in 2010, with a first project expected to begin production by September. Under terms of a recently announced separation agreement between Paramount and DreamWorks, the studios tagged more than 15 film projects apiece for continued development by their respective production staffs.
It's believed that DreamWorks will produce an untitled Lincoln biopic, political drama "The Trial of the Chicago 7" and kids literary adaptation "The 39 Clues."
DreamWorks spokesman Chip Sullivan declined comment on the developments.
Reuters/Hollywood Reporter
