MGM titles face financial test
EmptyThe recent global debt market crunch continues to make financing deals more challenging, with a planned $700 million-$1 billion funding for some MGM tentpole releases now facing some headwinds, according to sources.
The Financial Times first reported on its Web site late Wednesday that Goldman Sachs and Deutsche Bank have stepped down from their role as underwriters of the planned MGM slate financing amid the credit woes.
The studio has been looking for outside financing for such big titles as "The Hobbit," the fourth 'Terminator" installment and future "Pink Panther" and "James Bond" films, all on the list of movies that the two heavyweight investment banks have been looking to raise funds for.
An MGM spokesman had no comment late Wednesday. Deutsche Bank and Goldman officials couldn't be reached.
One source familiar with the situation said such deals would under normal market conditions take about 15-18 months to conclude. But amid the credit crunch, MGM may wait for the market to possibly bounce back later this year before pushing hard for the financing -- particularly, since the individual film projects also involve various development issues that must be resolved before any of the projects are expected to go into production.
The two banks could also very well remain in business with MGM and syndicate a loan by bringing in other partners, the person added.
The credit crunch, meanwhile, has had no effect on an estimated $500 million financing deal that MGM's United Artists label has pursued with Merrill Lynch, according to sources.
Georg Szalai reported from New York; Gregg Kilday reported from Los Angeles.