David Bergstein considers options

Capitol, ThinkFilm ponder next moves

NEW YORK -- David Bergstein's sale of his minority stake in IM Global last week heartened some in the industry that the beleaguered entrepreneur could be freeing up cash to pay his creditors or to pour back into his wholly owned Capitol Films.

But the move also raises the question for the privately held London- and Los Angeles-based Capitol and its New York-based U.S. distribution arm ThinkFilm: What now?

Bergstein and ThinkFilm topper Mark Urman recently have sought financing that could keep Capitol and ThinkFilm in business and releasing movies at least until year's end. ThinkFilm needs $10 million-$20 million in order to adequately service its upcoming release slate -- money that it needs by mid-August if it has any hope of getting its fall campaigns up and running.

The next few weeks, then, will be make or break for the distributor. If it comes up with the money, it could release its upcoming titles and at the very least buy more time. If it doesn't, ThinkFilm could, in one worst-case scenario, be dissolved and its upcoming movies sold off.

ThinkFilm has two key fall releases, the Bryan Cox and Joseph Fiennes prison-escape saga "The Escapist" and the Elle Fanning coming-of-age drama "Phoebe in Wonderland," both Sundance 2008 pickups. Two more unspecified Capitol films, one of which will play the Toronto International Film Festival, also could go out in the U.S. via ThinkFilm.

But even if Capitol is able to land funds in time, questions remain about where the money would wind up.

Capitol continues to face financial and legal pressures, including a $4 million lawsuit from marketing firm Allied, and many creditors likely are to come calling.

Even if money goes to ThinkFilm, the distributor faces a tricky situation because of outstanding debts owed to vendors -- marketing firms, car companies and all the other outside contractors a distributor employs.

If ThinkFilm decides to use the financing on campaigns for new releases, then it might find some vendors unwilling to work with them on those releases because of the outstanding debts.

But if pays back the vendors, those vendors will be willing to work on new releases -- but then there will be no money to spend on those releases.

"It's a classic chicken and egg problem," said one insider.

Still, last week's news that Bergstein sold his minority stake in IM Global for a seven-figure price suggested the possibility that future divestitures could come about that would provide more needed cash. Might one of those be ThinkFilm? The company does have a library of movies, including such breakouts as "Spellbound" and "Half Nelson," that could be coveted by a buyer.

As one indie film veteran said, "Two months from now, Think could be in the midst of another Oscar campaign, under new ownership or entirely dissolved. It all depends on the money."