The Film Department to Close by End of May
The company behind 2009 thriller "Law Abiding Citizen" says it fell victim to the credit crisis and had difficulty moving forward with financing.
The Film Department, the indie financing and production company that Mark Gill and Neil Sacker founded in 2007, is shutting down on May 27.
Although the company enjoyed success with the 2009 thriller Law Abiding Citizen, which was produced for $40 million and grossed $133 million at the worldwide box office, the company said it was a victim of the aftermath of the credit crisis and was unable to raise additional equity and debt needed to move forward and expand into U.S. distribution.
In announcing its closure, the company said it generated $90 million in revenues in the last 18 months, but was not allowed to keep it due to lender stipulations forced upon the company during the credit crisis.
It said it became profitable and improved its balance sheet by more than $105 million in the last year. It was attempting to raise $200 million in new private equity and debt, but was unable to close the recapitalization.
Over the past 18 months, the company said it paid off $40 million in senior debt to its commercial banks under customary terms. But in September, 2009, it was forced to accelerate repayment of its second-lien notes, which ultimately resulted in $50 million in early payments to a lender. That $50 million would otherwise have been available to the company to fund continuing operations, it said. When leveraged with traditional senior debt financing, those funds would have allowed the company to generate another $100 million in production commitments. Previously, the company said it had paid off its $140 million senior production loan facility in full.
“What if you made $90 million and your banks wouldn’t let you keep it? Basically, that’s what happened to us,” said Gill, chairman and CEO of the Film Department. “We managed to hold on in this impossible position for 15 months, but we couldn’t survive indefinitely.”
“We came within inches of closing our recapitalization on three occasions, but unfortunately close isn’t good enough,” added Sacker, vice chairman and COO. “We’re grateful to everyone‹filmmakers, talent, financiers, industry experts and our staff‹who contributed considerable time, effort, expertise and capital to the company.”
In addition to Citizen, the Film Department financed and produced the romantic comedy The Rebound, starring Catherine Zeta-Jones and Justin Bartha, and A Little Bit of Heaven, starring Kate Hudson, Gael Garcia Bernal, Whoopi Goldberg and Kathy Bates. Plans are being discussed for those two films to be released in the U.S. by third parties.