Filmax files for credit protection

CEO says company affected by drop in local distribution

MADRID -- Barcelona-based Filmax Entertainment filed for protection from creditors with a Barcelona court Tuesday, requesting four months to restructure its debt and avoid a formal suspension of payments.

"This is a precautionary measure so we can negotiate with banks and creditors without being attacked or embargoed," Filmax CEO Julio Fernandez told The Hollywood Reporter. "All of our responsibilities, everything, is up-to-date and we are business as usual."
 
Arguably Spain's most international player and certainly the flagship of the Catalan region's film industry, Filmax has created an international niche with genre titles like "REC" and "REC2." Such titles and their boxoffice success enabled the company to refinance its 100 million euro debt last April with 41 different financing institutions.
 
While Fernandez said the production, exhibition and international sales branches of the company performed well, he indicated a drop in local distribution as the primary problem.
 
"Local distribution is the difficult part," Fernandez said, pointing to Spain's rampant piracy as a key factor.
 
Television rights deals for non-Spanish fare have virtually dried up with Spanish broadcasters, as well.
 
Filmax, which boasts a catalogue of more than 2,000 titles, has invested some 500 million euros in Spanish distribution rights at a time when the Spanish market is declining.
 
Filmax's creditors -- with whom it will now have to renegotiate its debt -- include a few of its minority shareholders. Also a minority stake holder, the regional Catalan government's credit institute will probably not want to see one of the biggest companies in the region fail.
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