Par, bank team for sequel fund

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The Paramount Motion Picture Group, a unit of Viacom, and investment bank Dresdner Kleinwort announced a $300 million film financing arrangement Monday.

Called Melrose Investors 2 Llc., it is a follow-up transaction to the 2004 Melrose Investors Llc. fund, which invested $225 million in 25 Paramount films, beginning with the April 2004 release "Mean Girls."

The new fund will invest in the production costs of at least 30 films bearing the labels of Paramount Pictures, DreamWorks, MTV Films and Nick Movies. Titles from the studio's specialty division Paramount Vantage and the Paramount Classics label are not part of the package.

The new fund covers the current Paramount release slate beginning with the romantic comedy "Failure to Launch," which was released March 10. It includes the summer's "Mission: Impossible III," "Nacho Libre" and "World Trade Center"; the current "Jackass Number Two"; and such upcoming releases as "Freedom Writers," "Norbit," "Shooter" and "The Spiderwick Chronicles."

Melrose 2 is expected to cover films through 2007 and possibly into 2008. The new fund follows the basic outline of the original Melrose fund, which was arranged by Merrill Lynch, with Dresdner Kleinwort serving as lead arranger for the senior notes. Under the funds, investors, including both institutional investors and hedge funds, provide about 20% of the studio's production budgets for all films across its slate.

Melrose 2, for which Dresdner Kleinwort took the lead, adds features like revolving access to the fund rather than a one-time draw down and repay.

"The successful closing of Melrose 2 demonstrates a strong investor appetite for the film sector, as well as Paramount's considerable appeal to the investor community," said Laura Fazio, managing director and head of media, global banking, at Dresdner Kleinwort. "Paramount's movie labels reach a diverse set of moviegoers -- from kids and teens to adults and families -- and we have every confidence in the films being assembled under the leadership of (studio chairman) Brad Grey and his team."

Said Fazio: "I think the slate looks very good. There is a percentage of breakout films as well as solid performers. Going into the fall, 'Flags of Our Fathers' looks great. And both 'Charlotte's Web' and 'Dreamgirls' look like Christmas winners. So the outlook looks very positive."

Headquartered in London and Frankfurt, Dresdner Kleinwort is the investment bank of Dresdner Bank AG and a member of the Allianz Group.
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