Actors' studio cruises past finance worries
Limited role … MGM will market and distribute the United Artists films.
August 18, 2007
FOR the actor Tom Cruise and his partners, getting $US500 million ($640 million) to finance films during the credit crunch may seem like Mission: Impossible.
But they got their money. United Artists, the storied film label that Cruise, his producing partner Paula Wagner and Metro-Goldwyn-Mayer are reviving, said on Thursday that it had secured the $US500 million it had been seeking through Merrill Lynch to finance between 15 and 18 films over the next five years.
Although the deal was widely expected, the financing from investors in the US, Europe, Asia and Africa comes amid a tightening credit market on Wall Street that has made some deals appear shaky. That has raised concerns that the crunch could affect Hollywood studios and production companies, which have relied heavily on financing from investment banks, private equity companies and hedge funds.
Nine months ago the MGM chairman, Harry Sloan, struck a deal with Cruise and Ms Wagner to return UA to its roots as an artist-driven production company.
MGM owns 65 per cent of the unit; the remainder is owned by Cruise and Ms Wagner. "The closing of this financing is an important milestone for the new United Artists," said Ms Wagner, who is UA's chief executive. "It leaves us perfectly poised to realise our vision of making movies that are both important and commercial."
Mr Sloan has said that he wants UA to stand apart from MGM as an autonomous production unit, with its own film financing and bank credit lines. UA's business plan calls for MGM to market and distribute at least four of its films a year.
The silent-film stars Charlie Chaplin, Douglas Fairbanks and Mary Pickford and the director D.W. Griffith formed the studio in 1919 as a way to give artists creative freedom and ownership in their films.
The Merrill Lynch financing takes effect immediately and will cover two UA projects already under way, including the Robert Redford-directed Lions for Lambs, a political drama starring Cruise and Meryl Streep, set in Afghanistan and due for release in November. The second film is Valkyrie, a World War II thriller directed by Bryan Singer and also starring Cruise.
Separately, MGM disputed a news report that Goldman Sachs had withdrawn a commitment to underwrite a deal that would raise up to $US1 billion to finance the studio's films.
A company spokesman, Jeff Pryor, said MGM was still having discussions with Goldman Sachs and other banks but chose not to do a deal now, in part to focus on the UA deal. A spokesman at Goldman Sachs declined to comment.
Los Angeles Times