New Focus on financing
Investors commit $200 mil to Uni's specialty unitFocus Features has secured more than $200 million in funding from investment bank Dresdner Kleinwort that will cover 20-25 features, the company said Thursday.
Investment bankers have been putting financing packages together to fund the studios' slates, but the Focus deal is the latest example of investors doing business with specialty divisions. Paramount Vantage and Morgan Stanley this week announced a $150 million fund, Marathon Funding, which will invest in at least 15 films from that speciality division (HR 1/22).
Focus' revolving credit facility, dubbed Twins Financing, will apply to upcoming Focus titles. But it will not include movies from Focus' genre label Rogue Pictures or any from Working Title Films, owned by Focus' parent company, Universal Pictures.
Dresdner has experience in the film arena, having taken the lead in Dune Entertainment, a multimillion-dollar fund to finance films on the 20th Century Fox slate. Dune was extended in November.
Dresdner did have to make some adjustments in its finance model to accommodate the differing economics in the specialty films business; Focus, for example, often uses foreign presales to help finance projects. But Laura Fazio, a managing director of Dresdner, said that striking a pact with the specialty division reflected "the growth in the business and the appetite of the investors. It's not about how big the budgets are or the size of the pictures; it's about confidence in the company and its business plan."
She added: "From our perspective, we think there is an opportunity in this area of the market. It's dependent very much on the strength of the management team, and its affiliation with a larger studio is also helpful, since the strength of Universal's distribution network is key as well. This is a perfect deal for us, and the sun and the moon and the stars just all aligned."
Twin Financing will co-finance films with Focus across its slate ? both acquisitions and productions. If the two entities are the sole financiers of a given film, then costs will be split 50-50. If Focus brings another financial partner into a project, then the formula will be adjusted.
"This is a unique film financing initiative that takes any and all financial guesswork out of our big picture," Focus CEO James Schamus and president Andrew Karpen said.
The deal will cover such upcoming Focus films as Lajos Koltai's "Evening," starring Claire Danes, Toni Collette and Vanessa Redgrave; Shane Acker's animated fantasy epic "9"; David Cronenberg's "Eastern Promises," starring Viggo Mortensen and Naomi Watts; Terry George's "Reservation Road," starring Joaquin Phoenix, Mark Ruffalo and Jennifer Connelly; Martin McDonagh's "In Bruges," starring Colin Farrell; and "Lust, Caution," the next film from Ang Lee.
Studio execs said that the deal doesn't fundamentally change Focus' business model; the specialty unit will continue to make movies for a variety of negative costs but will not necessarily increase the size of its budgets.
Bennett Pozil and P. John Burke of Akin Gump Strauss Hauer & Feld arranged and structured the transaction with Dresdner, which underwrote the co-financing, working with Avy Eschenasy, Focus' executive vp strategic planning, business affairs and acquisitions.
Based in New York, London and Frankfurt, Germany, Dresdner Kleinwort is the investment bank of Dresdner Bank AG and is a member of the Allianz Group.