9:30am PT by Eriq Gardner
Open Road Reaches $87.5 Million Deal With Stalking Horse Bidder
Open Road, the Hollywood mini-major that declared Chapter 11 bankruptcy in early September upon mounting debt, will be selling its assets for at least $87.5 million at an auction beginning Nov. 7. In court filings Tuesday, the debtor revealed that it had reached an agreement with a stalking horse bidder.
The company, which belonged to U.S.-China broker Donald Tang, had global ambitions and a film library that includes such notable works as Oscar winner Spotlight, Side Effects and Nightcrawler. At the time of the bankruptcy filing, the company was coming off the box-office bomb Hotel Artemis and was also struggling to release the Johnny Depp film City of Lies amid lawsuits and at least $90 million owed to Bank of America.
According to the terms of the stalking horse agreement, the would-be purchaser of Open Road's assets will be entitled to a $2.1 million breakup fee in the event it gets outbid at next month's auction. The stalking horse bidder will also be entitled to up to $800,000 in expenses so long as the judge blesses the arrangement. According to court filings, Raven Capital Management is backing the bid. (Several years ago, the New York-based investment firm partnered with AMBI Media Group in acquiring the library of the now-defunct Exclusive Media.)
Financial consultants contacted approximately 50 potential buyers for assets belonging to the bankrupt studio, according to Tuesday's filing. Three dozen would-be buyers have signed nondisclosure agreements and 11 buyers have submitted indications of interest for the assets.
According to further documents, total liabilities for Open Road and affiliated entities are more than $93 million, so given the bidding price floor, many of the creditors figure to recoup much if not all of their debt.
The company has only two films set for release: the horror flick The Silence (Dec. 7) and the animated film Playmobil (Aug. 16, 2019), although the latter property is now being fought over between Open Road and Bank of America after a producer signed a distribution agreement and looked to make payment, only to find certain records never recorded with the Copyright Office.
Oct. 24, 11:30 a.m. Updated.