Who Are the Players Behind Relativity's Latest Cash Infusion?

Ryan Kavanaugh
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Though his film footprint is small, Maple Leaf Films' Michael Wexler is far more established in the hedge fund arena.

The plot continues to thicken in the Relativity Media saga.

Only three days after the company and would-be chairman Kevin Spacey acknowledged that the deal wasn’t going to work out after all, Relativity announced that it has landed a $400 million film financing pact with Maple Leaf Films.

But as with everything related to Ryan Kavanaugh’s Relativity, the deal begs more questions than answers — primarily, how can the relative newcomer to the film financing world flex that kind of money muscle?

The company, run by Tove Christensen (the older brother of Hayden Christensen) and Canadian hedge fund guru Michael Wexler, is an offshoot of Wexler’s Maple Leaf Capital. In 2013, the pair formed Glacier Films and backed a slate of low-budget movies, including the 2014 Elijah Wood horror pic Cooties and the Sam Worthington action thriller Hunter’s Prayer, which is in postproduction. Saban Films released several of Glacier's movies. 

“They have put some small equity into films, but the idea of $400 million seems goofy — like, no way,” said one veteran of the indie film finance world who worked with the pair on a project. 

Though its film footprint is small, Wexler is far more established in the hedge fund arena. Founded in 2002, Maple Leaf Capital’s largest hedge fund, the Maple Leaf Macro Volatility Fund, peaked with assets of $1 billion in 2008. Wexler is known to like the aggressive derivatives trading side of the business.

Over the past 10 years, the London- and Hong Kong-based firm has also moved heavily into real estate. In an interview with Hedgeweek, Wexler said the fund is backed by “institutional investors' fund of funds, corporates, family offices and high net worth individuals.”

But Wexler has been eyeing Hollywood more seriously for some time, and he and Christensen first opened up an office in Los Angeles in 2012. It is unknown what the terms of the Relativity deal are, but speculation is that it weighs heavily in Maple Leaf’s favor, given that Kavanaugh struggled to come up with the money needed to exit bankruptcy. Either way, Maple Leaf appears to be willing to take the gamble.

Perhaps the firm knows all too well the risky nature of investing in the film industry, let alone Relativity, and seems to be poking fun at it with a humorous fake ad on its website of a pack of cigarettes with the warning: “Derivatives trading can seriously harm your wealth and the wealth of others around you. Leave it to the experts." The ad includes a Southern California vista in the background and the tagline: “Made in Orange County.”

But the move appears to put Kavanaugh one step closer to emerging from bankruptcy with much of the studio’s film assets intact. Relativity filed for bankruptcy last July with $100 million to $500 million in assets and between $500 million and $1 billion in liabilities. But in October, Kavanaugh shocked the industry when he emerged as the one poised to reclaim control of the bankrupt studio with the exception of Relativity’s TV division.

On Friday, attorneys for Relativity will seek to convince U.S. Bankruptcy Judge Michael Wiles that they’ve met the conditions on approval of the reorganization plan by submitting the necessary paperwork regarding its appointment of Dana Brunetti and financing. The judge could inquire about Spacey’s exit and a change in who is providing exit financing. The judge will look to satisfy himself that confirmation won’t result in avoidable financial troubles down the line for Relativity.

Regardless, other issues will linger, including ones over contracts to be assumed or rejected by Relativity. Hearings are scheduled to consider those matters later this month and early April. Netflix has also lodged an appeal on the judge’s confirmation finding in hopes of escaping its big distribution deal with Relativity while one insurance agent is also hoping to ensure that delivery on two of the studio’s upcoming films — Masterminds and The Disappointments Room — can be completed in time (Disappointments Room is scheduled to open on March 25 and most surely will be pushed).

And in addition to securing the needed funds, Relativity also sees the deal as having an added bonus. A Relativity source says it will look to make future movies in Canada to take advantage of tax credits and currency savings and tap into Maple Leaf Films’ existing infrastructure to secure local subsidies. The source says that means the $400 million will go a lot farther than if it came from a non-Canadian source.

(Eriq Gardner contributed to this report.)

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