LOS ANGELES/NEW YORK (Reuters) - The Terminator will be back, but under new ownership.
A U.S. bankruptcy judge said on Wednesday the movie franchise could be sold to California-based, hedge fund Pacificor LLC, ending months of speculation about the future of the iconic film series after its current owner collapsed into bankruptcy in August.
U.S. Bankruptcy Judge Ernest Robles approved the sale during a hearing in his Los Angeles courtroom, saying it would offer the best deal for the company’s unsecured creditors.
He overruled an objection from movie studios Columbia Pictures and Lions Gate Entertainment Corp who had claimed the auction process was unfair after their joint bid for the franchise was not selected.
Under the deal, Pacificor would have the rights to the revenue from future films, games, DVDs and certain television programing from the franchise.
Pacificor has been in talks with several movie studios about future distribution and production of the Terminator films, and those talks are expected to intensify once the deal closes, according to a person familiar with the matter who declined to be named because the information was not public.
Pacificor did not return an e-mail seeking comment.
Halcyon Holding, had acquired the Terminator franchise in 2007 for about $25 million and produced “Terminator Salvation,” which took in about $371 million in worldwide box office returns last year.
Halcyon, which had been working on the concept for a fifth Terminator film, fell into bankruptcy amid a dispute with its backers at Pacificor, who had originally financed Halcyon’s purchase of the Terminator rights.
Pacificor, Halcyon’s largest creditor in the bankruptcy, made a winning “credit bid” of $29.5 million on Monday to acquire the franchise. It also promised to pay an additional $5 million to Halcyon’s bankruptcy estate for each future Terminator sequel created.
Pacificor’s bid beat out a $35.6 million joint offer from Lions Gate and Columbia Pictures, a unit of Sony Corp, which had promised to pay the estate a further $2 million for each of the sixth and seventh Terminator sequels, but no money for the fifth sequel.
In a bankruptcy auction, lenders are allowed to “credit bid,” forgiving much of the debt they are owed in exchange for taking control of franchise. The movie studios had contested last minute changes that allowed Pacificor to credit bid up to $38 million.
Judge Robles said he believed the Pacificor deal would lead to a better return for Halcyon’s unsecured creditors.
“They have the most at stake here,” Robles said.
The deal with Pacificor also settled several legal disputes between Halcyon and the hedge fund stemming from its collapse.
The sale is the second high profile movie franchise to be sold in the last few months. Nickelodeon paid $60 million for the Teenage Mutant Ninja Turtles franchise in October.
FTI Capital Advisors acted as the banker for the auction, Peitzman, Weg & Kempinsky LLP represents Halcyon and Pacificor is represented by Latham & Watkins.
The case is In re: T Asset Acquisition Company LLC, U.S. Bankruptcy Court, Central District of California, No. 09-31853.
Reporting by Alex Dobuzinskis and Emily Chasan; editing by Gerald E. McCormick, Leslie Gevirtz and Andre Grenon